Suppose that the demand for movie tickets is price inelastic for the range of prices between $10 and $12. If a movie theater raises the price of tickets from $10 to $12, what will happen to total revenues?
A) Total revenues will decrease.
B) Total revenues will increase.
C) Total revenues will not change.
D) Total revenues will have no relationship to the quantity of ties demanded.

Question

Quizplus · Accepted Answer

The demand for movie tickets is price inelastic, which means that a change in price will not have a significant effect on the quantity demanded. Therefore, if the theater raises the price of tickets from $10 to $12, the increase in price will result in a smaller decrease in the quantity demanded than the increase in price, leading to an increase in total revenues.

Suppose That the Demand for Movie Tickets Is Price Inelastic